NEWS – WEEKEND TO 11TH OCTOBER 2020
NEWS – WEEKEND TO 11TH OCTOBER 2020
TAX NEWS – WEEKEND TO 11TH OCTOBER 2020
HMRC set to appoint new chair
Potential successors to HMRC chair Mervyn Walker are being interviewed by a Whitehall panel, according to Sky News. Mr Walker, who has chaired HMRC’s board since 2017, has “had “a tremendous influence on the strategic direction of HMRC,” chief executive Jim Harra said. Sky News notes that HMRC’s previous boss, Sir Jon Thompson, left to become chief executive of the Financial Reporting Council. In a statement, HMRC said it was engaged in “a major programme of transformation to execute on its strategy for becoming a modern, trusted tax and customs authority”. Meanwhile, the FT reports that HMRC cut the number of tax probes it launched by half following the emergence of the coronavirus crisis to focus on implementing the government’s COVID-19 emergency support plans. Additionally, the Times notes that the total amount self-assessment taxpayers can now pay off in monthly instalments has been raised to £30 ,000 a year, up from £10,000. The move is designed to help people who are struggling financially because of the pandemic.
Government under pressure over VAT decision
The Government remains under pressure to reverse its decision to pull out of the VAT Retail Export Scheme, which was announced last month and will mean an end to overseas visitors reclaiming 20% VAT on items including handbags, clothes and watches. Both Harvey Nichols and Selfridges have warned of the severed impact on businesses across the country by the removal of the scheme. About £28.4bn was spent by overseas tourists in Britain last year, with £2.5bn reclaimed as tax-free shopping, according to the Centre for Economics and Business Research.
Tories set to rebel over plans to hike taxes for self-employed
Backbench Conservative MPs are planning a rebellion over Treasury moves to increase taxes on the self-employed to bring them in line with normal employees. One Tory MP said: “Self-employed workers have had a pretty rough deal and the idea that [the Chancellor] would now choose to make it even tougher for them seems perverse. Most people do not like the Treasury’s continual and institutional obsession with increasing tax on self-employed people.” Rishi Sunak was also criticised this weekend for failing to provide self-employed workers with extra support during local lockdowns. “Local lockdowns will affect many self-employed people just as much as employees, but as it stands they have much, much less support available to them,” said Andy Chamberlain, director of policy at IPSE.
Bilimoria: Don’t mis-time tax rises Rishi
The Mail on Sunday interviews Lord Bilimoria, the new chairman of the CBI, who has a simple message for the Chancellor which is not to jeopardise Britain’s recovery by hiking taxes for businesses, but slash taxes instead. Lord Bilimoria told the paper’s Alex Lawson: “With record low interest rates, we can afford to borrow to save the economy and to save jobs, and the worst thing you can do is put up taxes. If anything you need to put taxes down. You need to help businesses to survive and incentivise growth to get demand back. Business resilience is lower than it has ever been with cash and stockpiles running down, so when business is down on its knees, struggling in many cases to survive, you don’t want to stifle their recovery and their growth.”
The Mail on Sunday, Page: 131
Dedicated work spaces could invite a hefty tax bill
David Byers warns Sunday Times readers that if they created a home office during the pandemic that aspect of their property may be viewed by HMRC as a business premises when they come to sell and be subject to capital gains tax. Tim Stovold, a partner at Moore Kingston Smith, says people who, like him, have built a shed in their back garden during the pandemic are particularly at risk. RSM partner George Bull adds that home workers should avoid boasting online about their newly built or adapted office space. “If you set aside a room and say: ‘This is my study, I have a phone in there, a computer in there and I’m keeping it locked from the children’, that is going to crystallise a tax exposure,” he warned.
Tips on taking on HMRC
The Sunday Times reports that more disputes against HMRC are being upheld – 44% in the 12 months to April of this year compared with 35% in the previous 12 months. Accountants suggest the department is understaffed to meet the challenge of closing the tax gap, which they are under pressure to do, and is therefore making more mistakes. The paper talks to Tim Parr and Chris Etherington at RSM about how to resolve conflicts with HMRC. John Cassidy, a partner at Crowe UK, also advises on successfully appealing against a fine.
Make use of savings and investment allowances while you can
Jeff Prestridge posits in the Mail on Sunday that Rishi Sunak will target investors with a tax hike to help pay for the pandemic, starting with a rise in CGT on share disposals. The Chancellor may also look to dividend income and increase rates in line with income tax rates. With this gloomy prediction, Prestridge says: “Use your savings and investment allowances while they are still around – and get as much of your wealth as possible tucked inside an Isa.”
The Mail on Sunday, Page: 131
COVID-19 BUSINESS SUPPORT
Chancellor’s latest package branded ‘too little, too late’
Rishi Sunak’s new scheme to provide grants to businesses affected by local lockdowns and support for employees will not be sufficient to stave of mass redundancies or save businesses, experts say. From the start of November, workers in businesses forced to close in England will be given 66% of their usual wages by the state up to a maximum of £2,100 per month. Employers will not be required to contribute towards wages and only asked to cover national insurance and pension contributions. The Treasury will also pay cash to companies to help with their fixed costs of up to £3,000 per month payable every two weeks. Adam Marshall at the British Chambers of Commerce comments: “More generous cash grants will be of some help, but for most this will not be enough to offset a sustained cash crunch.” The Telegraph points out that the new measures only apply to businesses ordered to close completely, rather than partially, and so fail to help the sector outside a full lockdown. Roger Barker at the Institute of Directors welcomed the measures, but urged ministers to “get on the front foot where possible” by cutting employer national insurance costs and offering tax reliefs to encourage new jobs. Finally, Blick Rothenberg’s Nimesh Shah says in the i that the Chancellor’s expansion to the job support scheme illustrates “that he should have acted sooner with a revised furlough scheme when it was clear a few weeks ago that lockdown measures would need to be tightened.”
CORPORATE NEWS – WEEKEND TO 11TH OCTOBER 2020
Edinburgh Woollen Mill to appoint administrators
Edinburgh Woollen Mill Group has confirmed plans to appoint administrators in an attempt to save the business, putting up to 21,500 jobs at risk. The owner of Jaeger, Peacocks and Austin Reed – had been seeking a buyer for some weeks and will spend the next few weeks considering its options. The company said it was “responding to the harsh trading conditions caused by the impact of the COVID-19 pandemic and a recent reduction in its credit insurance”. It comes after credit insurance, which suppliers take out to cover orders yet to be paid for, was withdrawn two weeks ago amid a dispute over £27m that Bangladeshi factories say they are owed. Insolvency practitioners FRP Advisory are carrying out an urgent review before taking further action.
Vue announces midweek closures
Vue is to shut a quarter of its cinemas for part of the week after the cinema network brought in Deloitte to advise on surviving the pandemic. Vue will cut back opening times to four days a week at 21 of its 87 sites, keeping them closed on Tuesdays, Wednesdays and Thursdays. The temporary closures come after chief executive Tim Richards said Vue is “looking at all options” following the postponement of the release of the new James Bond film No Time To Die.
The Sunday Times, Business, Page: 7 The Mail on Sunday, Page: 126
Private equity-owned companies in ‘intensive care’ due to pandemic
New analysis has found that half of the companies owned by private equity managers are moderately or very affected by the coronavirus pandemic, while one in ten is in “intensive care”.
CRIME NEWS – WEEKEND TO 11TH OCTOBER 2020
UK fleeced by Eastern European gangs ripping off support cash
The Mail on Sunday reports that UK security services, HMRC and the Department for Work and Pensions are all working to crack crime networks plundering millions from the Chancellor’s coronavirus support schemes, with a whistleblower telling the paper that up to 90% of the fraud is being masterminded by gangs from Romania, Poland, Albania, Bulgaria and Turkey. The Government is reportedly considering expanding the use of Unexplained Wealth Orders to target high-level Covid fraudsters.
The Mail on Sunday, Page: 20
PENSIONS NEWS – WEEKEND TO 11TH OCTOBER 2020
Pensions: We’re not all in this together
The FT’s Merryn Somerset Webb says the pandemic has intensified Britons’ pension planning concerns, by creating uncertainty about the future of employment and the value of defined contribution pensions.
ECONOMY NEWS – WEEKEND TO 11TH OCTOBER 2020
Poor growth figures raise doubts about V-shaped recovery
Data from the Office for National Statistics show the UK economy grew by just 2.1% in August, far below the 6.4% expansion recorded in July. The 2.1% was less than half of the 4.6% which had been expected by analysts, according to a consensus taken by Pantheon Macroeconomics. Head of economics at the British Chambers of Commerce, Suren Thiru, said: “While the latest data confirms a rebound in economic activity continued into August, the sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels.”
Sunak issues warning over further lockdown measures
Caroline Wheeler reports in the Sunday Times on how Rishi Sunak has “cemented” his position as a lockdown hawk and has made fresh warnings about how a smaller economy in the future will mean less money for the NHS. Wheeler notes how concerned the Chancellor is too about young people starting their careers in a remote working environment and how he is determined they do not inherit a poor set of public finances, hinting at tax rises ahead to lower the debt burden.
FINANCE NEWS – WEEKEND TO 11TH OCTOBER 2020
Lenders update systems in preparation for negative rates
The Mail on Sunday reveals that banking chiefs have been preparing lenders for negative interest rates telling the Bank of England they could be ready within weeks if they were introduced. Industry figures are understood to have warned Bank officials that their systems cannot currently cope with a zero or negative value for interest rates, as they were designed only for positive values. In a report, PwC said: “There is a Y2K aspect to being ready for negative rates, as an enormous number of models, reporting systems, contracts and processes were designed by people who believed interest rates could only ever be positive.” The paper understands that major lenders have no plans to charge ordinary savers, current account customers or small businesses for holding money in their accounts if rates go negative. However, they would levy fees on deposits held by large corporate clients and wealthy individual customers may also face extra charges, sources said.
The Mail on Sunday, Page: 125
REPORTING NEWS – WEEKEND TO 11TH OCTOBER 2020
View earnings numbers with caution
Risk Capital Partners chairman Luke Johnson comments on the difficulties with projecting future earnings with the pandemic bringing so much uncertainty. He says, “auditors are being especially cautious this year and are focusing on the going-concern prospects for even very secure businesses, because of the unparalleled disruption.” He goes on to caution against taking computer modelling seriously, pointing to the Neil Ferguson projection of 500,000 deaths from COVID-19 – a “wild exaggeration” that “fuelled lockdown, panic and a disastrous assault on our way of life.”
REGULATION NEWS – WEEKEND TO 11TH OCTOBER 2020
UK has most to gain from Brexit state aid compromise
The Institute for Government has suggested that the Competition and Markets Authority should mimic the current EU rules covering state aid when Britain leaves the single market and customs union at the end of the year, until a new system is designed.
INTERNATIONAL NEWS – WEEKEND TO 11TH OCTOBER 2020
Advisers urge wealthy to act before Biden win
Advisers are telling wealthy American families to transfer fortunes to the next generation now or risk stinging taxes under a Joe Biden administration. The Democratic presidential candidate has proposed substantially higher taxes on the rich, including making it much harder to avoid a 40% levy on large estates. Tax law changes ushered in by President Donald Trump in 2017 doubled the amount that rich families can pass on without paying the tax, to $11.58m for individuals and $23.16m for couples this year. Jere Doyle, an estate planning strategist at BNY Mellon Wealth Management, said: “We’ve been telling people: ‘Use it or lose it’,” adding: “It’s the golden age of estate planning for a lot of people. We may not see anything like it again.” The Times points out that Biden’s promise to raise corporate taxes would negatively impact the revenues of British companies doing business in the US.< /span>
OTHER NEWS – WEEKEND TO 11TH OCTOBER 2020
Green’s refusal to enter Ashley talks blamed for BHS demise
A court has heard how Sir Philip Green’s refusal to “entertain” the sale of now-defunct BHS to rival Mike Ashley played a part in its demise. Trevor Burke QC at London’s Southwark Crown Court, representing Dominic Chappell, who bought BHS for £1 from Sir Philip a year before it collapsed, claimed a last-ditch effort was made to rescue BHS when Mr Ashley expressed interest in buying it in a “late night meeting”. He added: “Sir Philip Green wouldn’t entertain the notion of selling to a competitor and refused to engage, and ultimately BHS collapsed in chaos. Chaos for him, chaos for all those who worked there and chaos for the pensioners.” Mr Chappell is accused of dishonesty regarding VAT, corporation tax and income tax between January 2014 and September 2016 related to Swiss Rock, his bankrupt finance company. He has denied all charges.
Hopes for travel corridors between New York City and London
US officials are preparing to open up safe travel corridors between the US and international destinations as availability of COVID-19 tests grows. Talks are underway about opening up travel between New York City and London with shortened traveller quarantine periods as soon as the holidays. Currently, American citizens traveling to the UK must quarantine for 14 days and for the most part cannot travel to the European Union. The US bars entry to travellers from the UK and Europe unless they are US citizens or permanent residents.
Contact Paul Southward